The boss of Britain's biggest supermarket says that a 'lethal cocktail' could hurt the economy

Tesco's chief executive Dave Lewis — once dubbed "Drastic Dave" —
has had a go at the government, saying that the combination of
high business taxes and the new National Living Wage will be a
"potentially lethal cocktail" for retailers and customers.

Speaking
to the CBI conference on Monday, Lewis argued that Tesco has
faced falling property values, and falling profitability, but
also increased business rates. That's a combination the former
chairman of Unilever UK says could cause serious problems,
including increased prices and lost jobs.

Profitability in the supermarket sector has dropped substantially
in the last five years, Lewis pointed out in his speech. He
argued that in two years,
food price inflation has dropped from 4% to -2.4%, and that
as a result, profitability is now as low as 2%, down from 5% half
a decade ago.

Business
rates have played a big part in that, Lewis thinks. In the
retail sector, business rates now total £8 billion ($12.1
billion), which according to Lewis is more than a quarter of the
total paid by all businesses in the UK, and far higher than in
any other sector, he said.

"Our own business rates bill has increased by well over 35% in
the last 5 years. It’s the biggest tax we pay and it is now three
times OECD average. For every £1 ($1.51) we pay in corporation
tax large UK retailers pay £2.31 ($3.49) in rates. It’s
unsustainable and needs urgent reform."

Lewis also pointed out the pay and benefits packages given to all
employees by Tesco is equivalent to £8.80 ($13.30) per hour
outside of London — well above
the National Living Wage of £7.20 ($10.90). Lewis argued
that the problem with the Living Wage is that it could force the
company to raise basic salaries while cutting employee benefits.

"Our concern, and the concern of many colleagues, is that
there is pressure to increase base pay at the expense of
benefits. We don’t think this is the answer. We shouldn’t simply
strip down employment to an hourly rate or draw arbitrary lines.
It’s more complex than that. Benefits are hugely important to our
colleagues. Valuable too. Our workforce is not
homogeneous."

To combat the potential for his "lethal cocktail" Lewis was eager
to say that he wants the government to work more closely with the
retail sector to ensure its success.

"The impact of the retail sector on our wider economy is
absolutely massive. We need to be careful we don't lose or damage
some of that almost by accident."

Lewis finished his speech by saying that close collaboration
between government and retailers would be "good for people in
Britain as a whole."